Tatneft failed to recognise and enforce in Russia the arbitral award against Ukraine

Tatneft failed to recognise and enforce in Russia the arbitral award against Ukraine

Today the Moscow Commercial Court published its ruling in case No. А40-67511/2017 to terminate the proceedings initiated by Tatneft application to recognize and enforce arbitral award against Ukraine regarding Ukrtatnafta.

Previously the arbitral tribunal granted Tatneft claim to recover $144 mln damages arising out of the Russian-Ukrainian BIT. However, the tribunal decision establishing Ukraine’s failure to fulfill its obligation to provide fair and equitable treatment was generally based on the provision not only absent but intentionally excluded from the BIT by the Parties.

Despite ongoing cassation procedure in France, Tatneft filed three parallel applications to recognize and enforce the arbitral award in Washington, London and Moscow. Nevertheless, the procedure in Moscow was terminated by virtue of two arguments, presented by its counsel: state immunity of Ukraine and lack of property suitable for foreclosure.

KK&P lawyers argued that Ukraine had not expressed clear consent to waive its immunity from adjudication in Russian courts. In this regard, exercise of jurisdiction in respect to Ukraine would be a direct violation of Russian Law on Jurisdictional Immunities and rules of international law. The Moscow Commercial Court agreed with the latter view and also stated the difference between immunity from adjudication and immunity from execution, finding that recognition proceedings fall in the scope of the first type of immunity.

Alternatively, KK&P team drew the courts attention to the fact that diplomatic premises are not suitable for perspective foreclosure due to their diplomatic immunity. Hence, absence of another property of Ukraine in Russia means the lack of effective jurisdiction of Russian courts. For the first time dealing with this issue, the Moscow Commercial Court confirmed universal approach that national cultural centres of foreign states also enjoy the immunity from execution.